February 28, 2017

Brattle Economists and Academic Advisors Author Article for BNA on Damages in Product Mislabeling Cases

Brattle Principal Lisa Cameron, Academic Advisors Professor Greg Allenby and Professor Peter E. Rossi, and Brattle Senior Research Analyst Yikang Li recently co-authored an article for BNA about fundamental economic errors in approaches to damages in recent product mislabeling cases.

The article, “Computing Damages in Product Mislabeling Cases: Plaintiffs’ Mistaken Approach in Briseno v. Conagra,” critiques a hybrid method for calculating damages proposed in Briseno, a recent food mislabeling class action suit that has attracted widespread attention. In that case, a class of consumers sued Wesson for labeling its cooking oils “100% natural,” despite the fact that the oils contained genetically modified crops. Because the phrase “100% natural” contains multiple possible meanings, the plaintiffs proposed calculating damages with a two-step process. First, they would use a regression analysis based on historical data to determine how much consumers valued an all-natural label in general; then, they would break out the specific portion of that value attributable to the GMO-free interpretation of the label using a conjoint analysis that surveys consumers about their preferences.

The authors point out that this approach is unreliable in calculating damages, however, because it mixes information from two incompatible sources. Data about past prices reflect marketplace conditions of demand and supply. Consumer preferences, however, are based only on demand, and do not take into account market forces like costs, competitive conditions, and so on. In general, the authors conclude, damage estimates that rely on conjoint surveys must also take these other conditions into account; otherwise, they are economically suspect.

The article can be downloaded using the link below.

Associated Experts
Cameron 063
Dr. Lisa Cameron is an economist with two decades of experience consulting to attorneys and companies involved in commercial litigation, regulatory proceedings, and other complex matters. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Greg allenby photo search
Academic Advisor
Professor Allenby is the Helen C. Kurtz Chair in Marketing at The Ohio State University’s Fisher College of Business, where he is also a Professor of Marketing and Professor of Statistics. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
Academic Advisor
Peter E. Rossi is the James Collins Professor of Marketing, Economics and Statistics at UCLA’s Anderson School of Management, and is an influential and widely-cited expert in marketing, statistics, and econometrics. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4